While the First-tier Tribunal (FTT) is in principle a 'no costs' jurisdiction, it may make an order in respect of costs if a person has acted unreasonably in bringing, defending or conducting proceedings. Recently, the Upper Tribunal (UT) upheld a £70,000 costs order that the landlords of a flat had obtained against its two tenants.
The FTT had determined various applications by the tenants, including for the appointment of a manager. The landlords applied for a costs order against the tenants.
The FTT accepted the landlords' submission that one of the tenants had been willing to say whatever, whether truthful or not, without any regard for due process, fairness or courtesy. The FTT considered that the tenants had, in various respects, taken an unreasonable approach to the litigation. For example, in respect of roof repairs costing slightly more than £160, they had complained that the landlord had not permitted them to inspect the roof, using a ladder and without any form of harness, despite potential health and safety issues and the absence of any contractual right to do so.
In the FTT's judgment, it was an appropriate case to exercise its discretion to make a costs order. Obviously bad points had been pursued vigorously, and serious allegations of fraud and bad faith had been bandied about vexatiously.
The tenants appealed on the basis that the FTT had misapplied the test for reasonable behaviour, or alternatively that it had wrongly exercised its discretion in concluding that it ought to make an order for costs.
The UT rejected the tenants' complaint that the FTT had wrongly judged them more severely on the grounds that one of them was a property professional and the other was an impressive lay advocate. The FTT had located them within the spectrum of unrepresented litigants in order to consider what behaviour could properly be expected of them, in the context of reasonableness. It had plainly been right to do so.
The tenants argued that there was nothing in the FTT's judgment amounting to a finding that one of them had given dishonest evidence. However, the FTT had made a finding of fact that they had repeatedly made serious allegations of unlawful and criminal behaviour, and pursued them even when they were clearly hopeless. That was behaviour they had known was unjustified. The tenants' appeal against the conclusion that their behaviour had been unreasonable was dismissed.
The UT also found that the FTT had not wrongly exercised its discretion to make a costs order. Its findings that bad points had been vigorously pursued and that serious allegations had been bandied about vexatiously were open to it on the evidence. As its discretion had not been exercised improperly, the fact that a differently constituted FTT might have reached a different conclusion was not in point.